A relatively simple and inexpensive step or two can prevent catalytic converter theft and a resulting insurance claim, saving you money, time and a whole lot of inconvenience. Around the nation, tens of thousands of vehicle owners wish they’d taken preventive measures.
In Houston last week, police told a local television station that area thefts of catalytic converters are up 400% compared to one year ago. This occurred not long after a Mitsubishi dealership in neighboring La Porte, TX, had 14 converters stolen from new cars in a single night. And, in a discovery made at the end of a recent vehicular chase, Harris County, TX, sheriff’s deputies found 32 stolen converters along with $14,500 in cash.
Clearly, Greater Houston has a problem. And it isn’t alone.
According to the National Insurance Crime Bureau (NICB), the national monthly average of catalytic converter thefts in insured vehicles climbed from 108 in 2018 to 282 in 2019 to 1,200 in 2020. Texas had the second highest number of converter thefts during that span, the NICB said in a March 2021 release — just behind California, with Minnesota, North Carolina and Illinois rounding out the top five.
Colorado is not among the top five on the NICB’s list of states where catalytic converter theft is most common, and yet this year in Denver alone, police report there had been nearly 1,000 catalytic converter thefts between January and May.
"Manufacturers can't keep up with supply and demand right now, so we’re having a hard time getting products and people’s cars back on the road,” the owner of an area muffler and brakes shop told Denver station KMGH-TV. “I would say, in the last 30 years I've done maybe 30 stolen (catalytic converters), and we've probably done 500 in the last year-plus — possibly more than that."
Why Catalytic Converters? Why Now?
That the explosive growth in such thefts has occurred during the COVID-19 pandemic is no mere coincidence.
Many thieves are less interested in the converters themselves than they are in the precious metals that partially compose them: palladium, platinum and rhodium. Already valuable before 2020, the precious metals have soared in price since the onset of the COVID, as pandemic-related labor reductions have limited the mining of precious metals and disrupted supply chains.
Thefts aimed at precious metals have created a greater need for catalytic converter replacements, which in turn has led to a shortage of replacement parts and a corresponding surge in thefts in response to that shortage.
Crime of Opportunity
In addition to economic forces, what makes catalytic converters such inviting targets for thieves is convenience. Catalytic converter theft is a crime of opportunity. Using simple tools, a thief can remove an unprotected catalytic converter from vehicle in seconds and extract multiple converters — such as at the Texas Mitsubishi dealership – in mere minutes.
Trucks and SUVs make particularly inviting targets because it’s easier for thieves to slide under them without having to use a jack. The Toyota Prius also is a frequent target because, as a low-emissions vehicle, its converter contains larger amounts of rhodium, palladium and platinum, which serve to render pollutants harmless.
While recyclers pay from $50 to $250 per catalytic converter, according to the NICB, replacing a converter can be far more costly – once you’re able to get one. A theft victim in Denver told KMGH he had to pay part of the $4,500 cost of replacing the catalytic converter in his Toyota Tundra and was given a projected wait time of three to eight weeks for the part to be delivered.
Parts Theft, Insurance and Prevention
If you have comprehensive Auto Insurance – including theft, as well as physical damage and liability — your policy will cover replacing a stolen catalytic converter, minus the deductible. That, however, requires submitting a claim, which can adversely affect future premiums. If your policy is limited to liability, there’s no coverage for theft or repair.
Of course the best way to avoid costs associated with a stolen catalytic converter theft is to prevent the theft from taking place, as NPR recently reported.
Here are five tips for mitigating the risk of catalytic converter theft:
If your catalytic converter is stolen, you’ll know from the roar emanating from the exhaust system as soon as you start your vehicle. Take photos to show where the converter was removed, file a police report as soon as possible, and notify your insurance agent or carrier. And when you replace the part, ask about installing a security device to prevent the theft from happening again.
Sylvia Group, An Alera Group Company
No one looks forward to filing an insurance claim, but when a claim is necessary, it's good to know there's a knowledgeable professional available to guide you through the process and advocate on your behalf. In Julie Vieira, Sylvia Group clients have a claims executive who combines years of insurance, claims and business experience with an empathetic, customer-focused approach to resolving each claim in timely and satisfactory fashion. A licensed Property and Casualty Adjuster, Julie joined Sylvia Group in January 2017. While her specialties include municipalities and construction, she is highly skilled in communicating with and educating clients involved in the claims process across a broad range of industries.
When it comes to wellbeing, employers often find themselves challenged by how to approach a shift from a traditional wellness model to a comprehensive and holistic program that supports the whole person. Below you’ll find this week’s curated list of wellbeing resources. Feel free to share these resources, as appropriate, with your team.
Social & Family Wellbeing
Employer Focused Wellbeing
Location expands expertise in employer provided benefits
Alera Group, a leading financial services and risk management company, is pleased to acquire Cafeteria Plan Advisors, Inc., a company specializing in the administration of employee pre-tax benefits plans such as premium only plans and flexible spending accounts (FSA).
“Our mission is to provide exceptional service to our clients and their employees in the administration of employer provided benefits. Joining Alera Group will allow us to continue expanding our mission through collaboration and resources, providing peace-of-mind for all of our clients and their employees,” said Jim Mellen, President of Cafeteria Plan Advisors, Inc.
Headquartered in Massachusetts, Cafeteria Plan Advisors is the leading administrator of municipal flexible benefit plans in Massachusetts, currently operating cafeteria plans in over one hundred cities and towns across the Commonwealth. The company provides Premium Only Plans (POP), Flexible Spending Healthcare Accounts (FSA), Health Reimbursement Arrangements (HRA) and Transportation Accounts in addition to consulting services for employers regarding their pre-taxed or tax favored benefits to a variety of businesses such as schools, municipalities, restaurants, hospitals and private corporations.
“Cafeteria Plan Advisors’ dedication to client service makes them an excellent fit for Alera Group,” said Alan Levitz, CEO of Alera Group. “Not only will the company expand our footprint in the Northeast, but it will also strengthen our pre-tax employee benefits offering.”
The Cafeteria Plan Advisors, Inc. team will continue serving clients in their existing roles. Terms of the transaction were not announced.
About Alera Group
Alera Group is a leading financial services and risk management company with more than $600 million in annual revenue offering comprehensive employee benefits, property and casualty, retirement services and wealth management solutions to clients nationwide. By working collaboratively across specialties and geographies, Alera Group’s team of more than 2000 professionals in more than 100 offices provide creative, competitive services that help ensure a client’s business and personal success. For more information, visit www.jmjwebconsulting.com or follow us on LinkedIn or Twitter.
As the United States continues to fight against the spread of COVID-19, vaccinations of the most high-risk Americans have begun. To date, there are three vaccines, one from Moderna, one from Pfizer, and one from Johnson & Johnson, that are available on a limited basis, with distribution being handled at the state and local level. As of the summer of 2021, all Americans age 12 and over are eligible to receive the vaccine in their locality. As businesses are eager to return to the office and bring customers back on-site as applicable, many employers are wondering if they can require their employees to receive the COVID-19 vaccine as a condition of employment.
The short answer: We are waiting for more guidance from the government on this issue. Currently, the vaccines are only available under the FDA’s Emergency Use Authorization (EUA). This is different from FDA approval. Under an EUA, the FDA has not yet compiled all the evidence and clinical data that it normally would compile before approving a vaccine for public distribution and use. This means that the FDA has an obligation, among other things, to inform recipients of the vaccine that they have the option to accept or refuse the vaccine. Therefore, there are a series of considerations an employer should work through prior to rolling out a vaccine requirement, or incentive program.
The longer answer: there are many considerations when determining if an employer can require, strongly encourage or incentivize employees to receive the COVID-19 vaccine. The decision presents enormous employee relations issues as many employees may be skeptical about the vaccine and mandating the vaccine may create pushback from employees and affect morale. Additionally, the nature of the business and job-relatedness of vaccination are important factors.
Regulatory guidance can assist employers in their decision-making process. Currently, OSHA has not yet issued any guidance on whether employers may require employees to be vaccinated. The Equal Employment Opportunity Commission (EEOC) has stated that if employers require employees to get the COVID-19 vaccine, exceptions must be made for employees who are not able to be vaccinated due to a disability or a sincerely held religious belief. Obviously, vaccine requirements must be job-related and consistent with business necessity. Moreover, state and local laws may affect an employer’s right to require employee vaccination. The EEOC has expressly noted that its guidance does not discuss or contemplate the current EUA status of vaccines, and the EEOC has no jurisdiction over the FDA approach to vaccines.
At the forefront, existing federal regulations must be considered, particularly the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). The EEOC has issued guidance on the interplay between vaccinating employees and these regulations, answering key questions such as whether administering the vaccine is a “medical examination” for purposes of the ADA, whether asking an employee for proof of a vaccine is a disability-related inquiry and how employers should respond to employees who are unable to receive a vaccine because of a disability, or a sincerely held religious practice. Reasonable accommodations must be considered and evaluated, such as face masks, social distancing, modified shifts, additional COVID-19 testing, telework or even reassignment. If employers determine they can and will require the vaccine, medical and religious objections, as well as personal objections, need to be considered in any policies and processes.
Incentivizing employees to make health decisions, such as receiving influenza vaccinations or eating healthy foods, has long been allowed by federal regulators, within certain parameters. These wellness programs can have a positive impact on employee’s lives but require careful setup and consideration to ensure they do not veer into discriminatory territory. Vaccinated employees might still need reasonable accommodations due to disability if their disability puts them a heighted risk for severe illness from COVID-19 – reasonable accommodation requests should be processed appropriately and in accordance with the ADA. Employers who choose to require vaccination and provide COVID-19 vaccines to their employees on-site or through a third-party agent should consider the ADA implications of the pre-vaccine screening questions- the employer would have to have a reasonable belief that an employee who does not answer the questions and cannot be vaccinated will pose a direct threat to their own health or the health and safety of others in the workplace. Employers should be prepared that some employees might challenge the screening questions and be able to justify them under the ADA. If an employer chooses to simply offer a vaccine clinic to any employee who would like to be vaccinated would not trigger reasonable accommodation needs.
Employers are not making a disability-related inquiry about an employee if they ask for documentation that an employee received the COVID-19 vaccine from a third party (such as their physician, a pharmacy or a local vaccine clinic). This request is also not prohibited by HIPAA, because HIPAA only protects health care information in the hands of covered entities, which are health plans (like health insurance companies, group-sponsored health plans, etc.), health care providers and health care clearinghouses. An employer asking an employee directly for documentation of the vaccine is not protected by or prohibited under HIPAA. The information is however personal and confidential, and employers should protect the information the same they would any other personal and confidential information about their employees.
Employers must also consider the potential impact of either not requiring (or encouraging) vaccines and the potential of an outbreak in the workplace, or for requiring vaccinations, which could result in claims from employees against their employer if they believe they suffer harm due to a vaccination.
State laws are also important to consider. Some states have issued guidance through their departments of labor, or bureaus of labor and industry, etc. Employers who operate in multiple states may have to review state laws and regulations in a variety of jurisdictions. Some states may provide categorical exemptions for certain types of employees.
Finally, some employee populations, such as contract employees or employees subject to a collective bargaining agreement, may also require additional analysis by employment counsel to determine if mandatory vaccines are possible.
In summary, although employers are likely able to require the vaccine in some capacity, a variety of regulations and laws, as well as practical considerations, must be reviewed and considered. Employers should be prepared to handle employees’ objections to the vaccine and have a standard process for determining if reasonable accommodations exist, that are compliant with the ADA, and Title VII. Employers should always consider local vaccine availability when developing any type of vaccine requirement or incentive program.
The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such. Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice. This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.
This article was last reviewed and up to date as of 06/10/21.
Alera Group, a top independent, national insurance and wealth management firm, today announced a cohort of six employees achieved the Diversity & Inclusion training and certification through Cornell University’s Diversity & Inclusion virtual program.
This initiative was sponsored by Alera Group’s Inclusion and Diversity committee, an internal program established to foster a culture of respect and belonging that values the uniqueness of the individual to grow, innovate and strategically advance Alera Group. The six members of the learning cohort include:
“We are immensely proud of this learning cohort and look forward to seeing the impact of their knowledge across the organization. Inclusion and diversity drive better decision making, inspire innovation and increase organizational efficiency, all of which positively impact our clients, industry and communities,” said Debra Martinez, CHRO of Alera Group.
Martinez continued, “Across the country at Alera Group, we strive to foster a culture where everyone is included and valued—which results in best-in-class solutions for our clients and a positive working environment for our employees.”
The four-month program included courses on improving engagement, counteracting unconscious bias, fostering an inclusive climate, and diversity and inclusion at work.
About Alera Group
Alera Group is an independent, national insurance and wealth management firm with more than $500 million in annual revenue, offering comprehensive employee benefits, property and casualty, retirement services and wealth management solutions to clients nationwide. By working collaboratively across specialties and geographies, Alera Group’s team of more than 2,000 professionals in more than 100 offices provides creative, competitive services that help ensure a client’s business and personal success. For more information, visit www.jmjwebconsulting.com, or follow us on LinkedIn or Twitter.
I hope you had a wonderful weekend. Based on feedback from our readers, we'll be pivoting from a weekly to an every other week cadence for our wellbeing resource blogs. We hope that these articles continue to help leaders across the country equip their employees with powerful, and holistic, wellbeing education.
Social & Family Wellbeing
Employer Focused Wellbeing
On May 10, 2021, the IRS released Notice 2021-26, which provides additional guidance on relief authorized under in the Consolidated Appropriations Act , 2021 (CAA), the American Rescue Plan Act (ARPA), and previous IRS guidance issued in Notice 2021-15. Specifically, IRS Notice 2021-26 clarifies the maximum amount that can be excluded from an individual’s gross income for dependent care expense reimbursements in 2021 and 2022 under a dependent care FSA / dependent care assistance program (DCAP) when the plan is using the extended grace period or carryover pursuant to the CAA. The new guidance permits individuals to take full advantage of both: (a) any extended carryover or grace period relief under the CAA; and (b) the increased maximum limit under Section 129 of the Code (from $5,000 to $10,500, or $2,500 to $5,250 for married couples filing separately) authorized under ARPA for 2021, if permitted under the employer’s plan. As a result, individuals may receive up to $15,500 in non-taxable reimbursements under a DCAP in 2021, if it meets all applicable nondiscrimination requirements.
The guidance is discussed in more detail below.
As we previously reported, the CAA authorizes employers to amend their cafeteria plans to allow DCAPs to either carry over all unused funds from a plan year ending in 2020 to a plan year ending in 2021 and from a plan year ending in 2021 to a plan year ending in 2022 or extend its grace period for a plan year ending in 2020 or 2021 to 12 months after the end of the plan year (versus the normal 2.5 months). Notice 2021-15 provided that if an employer adopted either the extended grace period or carryover relief, then the annual limits in §129 of the Code apply to amounts contributed to a DCAP for a particular year, and not to amounts reimbursed or otherwise available for reimbursement from DCAP in a particular plan or calendar year.
Per the IRS, this meant any unused amounts carried over from prior years or available during an extended grace period are excluded when determining the annual limit applicable for the following year. Thereafter, Congress passed ARPA, which amended §129 of the Code to increase the exclusion for qualified dependent care expenses to $10,500 ($5,250 for married couples filing separately) for calendar year 2021. Employers who choose to adopt the temporary $10,500 exclusion limit must amend their plans before the last day of the plan year for which the amendment is effective, which would be December 31, 2021 for calendar year plans.
The IRS’ New Guidance
Calendar Year Plans
Notice 2021-26 clarifies that if an employer adopts the extended carryover or grace period under the CAA and allows individuals to exclude up to $10,500 ($5,250 for married couples filing separately) in 2021 per ARPA, then:
The IRS provides the following example for a calendar year plan:
An employer adopts the carryover relief under the CAA. An employee elected to contribute $5,000 to his DCAP for the 2020 plan year but incurred no dependent care expenses during the plan year and, therefore, carried over $5,000 to the 2021 plan year. The employer amends the plan to allow employees to contribute up to $10,500 for DCAP benefits for the 2021 plan year, and the employee elects the full $10,500. The employee incurs $15,500 in dependent care expenses in 2021 and is reimbursed $15,500 by the DCAP. The $15,500 is excluded from the employee’s gross income and wages because $10,500 is excluded as 2021 benefits and the remaining $5,000 is attributable to a carryover permitted under the CAA.
Non-Calendar Year Plans
While the above is relatively straightforward for calendar year plans, the relief is not as simple for non-calendar year plans. Employees are able to enjoy the full extent of any carryover or extended grace period relief under the CAA; however, if employers intend to amend their plans to allow employees to increase their elections for the plan year beginning in 2021 from $5,000 to $10,500, they are urged to proceed with caution. Because ARPA limits the $10,500 exclusion to calendar year 2021, Notice 2021-26 clarifies that the increased exclusion amount will not apply to reimbursement of expenses incurred during the portion of the plan year falling in 2022.
Ultimately this limits the maximum reimbursement excludable from an employee’s income for calendar year 2022 in one of two ways:
Example 1: If an employer adopts the $10,500 limit for the plan year beginning July 1, 2021, and an employee elects to contribute to their DCAP for the first time (i.e., there is no carryover from a prior plan year), then if the employee incurs $5,000 in dependent care expenses during the period from July 1, 2021, to December 31, 2021, the employee has $5,500 of DCAP benefits available as of January 1, 2022 (once contributed). $5,000 would be excluded from income for the 2021 tax year and $5,500 would remain eligible for reimbursement from January 1, 2022 through June 30, 2022. For the plan year beginning July 1, 2022, the employee can elect up to $5,000. If the employee incurs $5,500 in dependent care expenses during the period from January 1, 2022, through June 30, 2022, elects to contribute an additional $5,000 for the plan year beginning July 1, 2022, and incurs an additional $2,500 in dependent care expenses between July 1, 2022 and December 31, 2022 (for a total of $8,000 incurred in 2022), then only $5,000 is excluded from the employee’s gross income and wages under § 129 of the Code. Therefore, the remaining $3,000 received by the employee is included in the employee’s tax year 2022 gross income and wages.
Example 2: If, on the other hand, (1) an employer adopts the extended carryover or grace period under the CAA for the 2020 plan year and the $10,500 limit for the 2021 plan year, (2) an employee carries over $5,000 from the 2020 plan year (the plan year ending on June 30, 2021) and elects the full $10,500 for the plan year beginning July 1, 2021, and (3) the employee does not incur any dependent care expenses until January 1, 2022, then the employee could be reimbursed up to $10,000 in calendar year 2022: $5,000 due to any carryover from the plan year ending on June 30, 2021; and $5,000 from any elections made that would be reimbursed in 2022 (such as from the period of January 1, 2022 through June 30, 2022 for the 2021 plan year or July 1, 2022 through December 31, 2022 for the 2022 plan year). However, if the employee incurs $10,500 in dependent care expenses for the 2021 plan year between January 1, 2022 and June 30, 2022, $500 would be included in the employee’s tax year 2022 gross income and wages. Further, if the employee makes a new election of $5,000 for the 2022 plan year and incurs $2,500 in dependent care expenses between July 1, 2022 and December 31, 2022, then $3,000 would be included in the employee’s tax year 2022 gross income and wages.
Therefore, employers with non-calendar year plans are urged to consider these implications when adopting relief for employees and to ensure employees understand these limitations so they are not surprised at a later date.
What Does This Mean For Employers?
Ultimately, we urge caution for any employer who chooses to adopt the $10,500 limit permitted under the ARPA, as the IRS has been very clear that nondiscrimination rules apply. Nondiscrimination testing for DCAPs is often difficult for plans to pass; however, introducing a limit that is more than double the normal limit will likely only serve to exacerbate this issue, as generally only highly compensated employees would be able to set aside up to $10,500 for dependent care expenses. Furthermore, as set forth above, if the employer has a non-calendar year plan, the applicability of ARPA, CAA, and Notice 2021-26 relief may result in unintended or unexpected taxable income issues for employees. Employers should evaluate these risks for their plans and work with counsel when adopting any plan amendments.
About the Author. This alert was prepared for Alera Group by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on ERISA-governed and non-ERISA-governed retirement and welfare plans, executive compensation and employment law. Contact Stacy Barrow or Nicole Quinn-Gato at email@example.com or firstname.lastname@example.org.
The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.
© 2021 Marathas Barrow Weatherhead Lent LLP. All Rights Reserved.
Alera Group, a leading financial services and risk management company, today announced the acquisition of Boston Benefit Partners (BPP), a health and welfare consulting and brokerage firm providing client insight, in-depth analysis, strategic planning and thoughtful execution of employee benefit plans.
“We continuously adapt to the needs of our clients by developing strategic solutions that address the unique challenges they face,” said Carol Chandor, Managing Director and Chief Executive Officer of BBP. “Our diverse client portfolio and long-term consulting relationships are a testament to the depth and breadth of our expertise and resources. Joining Alera Group will provide our clients with more resources and give our valued employees opportunities to collaborate with other accomplished Alera Group firms across the country.”
BBP is a customer-centric consulting firm founded by Carol Chandor, Piper McNealy and Kathryn Tolan. The company is recognized for its white-glove service model and data-driven approach to strategy and problem solving. Additionally, BBP is certified as a women-owned business through the Women’s Business Enterprise National Council (WBENC), the nation’s largest third-party certifier of businesses owned and operated by women.
“Boston Benefit Partners provides clients with data-driven technical expertise and strategic, creative solutions,” said Alan Levitz, CEO of Alera Group. “The client-oriented mission of Boston Benefit Partners aligns with Alera Group’s mission of transforming the client experience, making them a great addition to our team. We are thrilled to continue to expand our footprint and service capabilities in Massachusetts and look forward to the positive impact our collaborative culture will drive for our clients.”
The Boston Benefit Partners team will continue serving clients in their existing roles. Terms of the transaction were not announced.
About Alera Group
Alera Group is a leading financial services and risk management company with more than $600 million in annual revenue offering comprehensive employee benefits, property and casualty, retirement services and wealth management solutions to clients nationwide. By working collaboratively across specialties and geographies, Alera Group’s team of more than 2,000 professionals in more than 100 offices provides creative, competitive services that help ensure a client’s business and personal success. For more information, visit www.jmjwebconsulting.com or follow us on LinkedIn or Twitter.
After years of bad news about insurance for the trucking industry, insurers and truckers alike may have reason to feel bullish about the remainder of 2021. The source of optimism can be summed up in one word: information.
Nuclear verdicts in liability lawsuits – the No. 1 cause of the hard market for insurance – remain a problem, though the recent Texas Senate passage of a reform bill aimed at curbing lawsuit abuse is encouraging to many in the trucking industry. A shortage of experienced truckers by many accounts remains a problem, though how big a problem is subject to debate.
But information – largely from telematics feeding data to drivers, employers and insurers – offers an opportunity to improve safety, contain premiums and promote efficiency. Combine the use of analytics with the information an insurance professional who knows the trucking industry and understands the needs of your business can provide, and you have all the elements of a performance-based Property and Casualty program that will enhance, rather than impede, your business.
While the hard market for Commercial Auto Insurance and other Property and Casualty coverage may not be a thing of the past, information is paving the way toward better conditions for the trucking industry.
Market Cycles and Nuclear Reaction
As Alera Group noted in our 2021 Property & Casualty Market Outlook whitepaper, 10 consecutive years of Commercial Auto Insurance underwriting losses – culminating in $4 billion in losses for 2019 alone – made a market correction inevitable. Many carriers ceased providing coverage to truckers altogether, and those who remained in the market raised rates to help offset the losses. Fewer carriers resulted in fewer options for truckers and trucking companies, while underwriters still in the market increased scrutiny and selectivity.
Because Property and Casualty, like most markets, is cyclical and the P&C market had been generally favorable toward buyers for years, a correction was due to happen. Nuclear verdicts – defined as lawsuit awards that surpass $10 million, and influenced by the phenomenon known as social inflation – helped turn a mere correction into a detonation.
As CNBC reported earlier this year:
According to data analyzed by the National Safety Council, just over 5,000 large trucks were involved in fatal crashes in 2019, a 43% increase from 2010. The number of injuries associated with truck crashes rose 7% that year to 160,000, with the majority being occupants of other vehicles.
Jury awards for crashes are also skyrocketing. When considering verdicts of more than $1 million, the average size increased nearly 1,000% from 2010 to 2018, rising from $2.3 million to $22.3 million, according to a study last summer by the American Transportation Research Institute.
The effect of nuclear verdicts has been mitigated somewhat by the COVID-19 pandemic, with reduced motor vehicle traffic contributing to a sharp decline in claim frequency. But the rise in claim severity has continued unabated, as Claims Journal recently reported, threatening to erode recent insurance industry gains.
Changing Attitudes Toward Technology
Claims Journal based its story on a recent report by Fitch Ratings, in which the Big Three credit stated: “The commercial auto insurance segment posted the best underwriting result in a decade, with a combined ratio (CR) of 101.6% for 2020, nearly 8 percentage points better than 2019. Consecutive large renewal rate increases and a sharp reduction in driving activity tied to the coronavirus pandemic contributed to this change.”
The gradual return of vehicular traffic to pre-pandemic levels is likely to reverse the reduction in claims, but this is where information from telematics and other forms of technology come into play.
“Technology offers some hope,” Claims Journal noted. “Fitch said developments in global positioning systems, sensor technology and telematics allow trucking companies to better monitor driver behavior and vehicle use. Electronic logging devices required by the Federal Motor Carrier Safety Administration adds to an abundance of data.”
Insurance Business magazine delves more deeply into this topic in its May 24 article “Telematics tools have a ‘really good return on investment.’”
Citing a gradual embrace of technology after initial fears that the gathering of data would be too expensive and give “Big Brother” too big a role in the trucking industry, Insurance Business reports, “Trucking companies and fleet operators have started to realize the benefits of telematics solutions, and they now welcome technology for its positive safety and operational impacts.”
The information telematics tools provide include data about vehicle location, driver behavior and engine diagnostics. Interior and exterior video complement the data by enabling trucking companies and fleet managers to review events and make real-time observations that can protect both the company and the driver. This information also can be used to counter emotional appeals to juries with analytic and video evidence of what actually happened in an accident that led to a lawsuit.
In addition, drivers like the automated completion and submission of mandated logs, which relieves them of one often tedious but important task.
It’s also worth noting that increased vehicular traffic – particularly from long-haul, heavy construction and local delivery drivers – isn’t in and of itself a bad thing. If more trucks are rolling, that means more policies, more endorsements and more premiums for insurance carriers. That, in turn, provides incentive to carriers to enter or return to the market, providing truckers with more options and increasing competition among carriers for their business.
And because telematics and video are such useful risk management tools, a company that uses them is appealing to underwriters in the insurance marketplace.
The Value of a Trusted Advisor
Here’s something else underwriters appreciate: insurance agents and brokers who have built strong relationships with clients and carriers.
Underwriters value stability and transparency. They don’t like sloppiness and uncertainty. While an established agent or broker lends credibility to a client, an inexperienced or insufficiently prepared one can cause lasting damage. Once a carrier rejects a poorly completed application, that carrier is essentially off-limits to the applicant – regardless of whether the applicant hires a new broker.
An experienced, knowledgeable broker also is able to write Commercial Auto Insurance coverage not simply as a complete and comprehensive policy but as one important component of a customized Property and Casualty Insurance program – one designed to the specific needs and objectives of your business.
Even if your business has yet to adopt telematics, for example, you’re exposed to multiple cyber risks, including ransomware attacks that could bring your entire fleet to a screeching halt. Well-designed Cyber Insurance coverage enables you to manage the risk of attack and get back up and running in the event a breach does occur.
To learn more about Cyber Insurance, view the Alera Group webinar “Cyber Security: What to Do Before and After a Breach.”
About the Author
Bondar Insurance Group, An Alera Group Company